Do I understand correctly that you think that outlawing creation of custom licenses besides the chosen and already existing few will solve the perceived problem?

What's the next step, outlawing forks, since there are already enough projects?

And why do you see the very existence of the library with "no evil" clause as a market failure? Is that some people think that it's basic human right to be allowed to do evil? Doing evil, if we define evil as illegal, is already outlawed, so this one phrase is clearly redundant.

I said you, but it's not addressed to you, but to people that got so offended and turned up by this small "do no evil" purpose.

The market already decided, and that clause is there for a purpose. The author clearly didn't want people unsure if this piece of software will be used for good or evil to use it.

It's funny that people are ready to sign all kind of nonsense in commercial licenses, and this small clause makes so much pain to some "open source" developers.